ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, November 1, 1996 TAG: 9611010032
SECTION: BUSINESS PAGE: A10 EDITION: METRO
DATELINE: NEW YORK
SOURCE: BLOOMBERG BUSINESS NEWS
Wal-Mart Stores Inc. and Limited Inc. have sued Visa U.S.A. Inc., charging that the credit card company illegally forces merchants to accept its debit cards.
Debit cards, which are used like credit cards but draw on a customer's checking account rather than a line of credit, are becoming more popular. The suit says Visa's policy of requiring merchants to accept all of its cards violates antitrust laws.
The retailers say the fees they pay to Visa for the check cards are too high. The financial power behind Wal-Mart and Limited, two of the nation's largest retailers, makes the suit a significant challenge to Visa, the largest credit card company.
The suit, filed Friday in U.S. District Court for the Eastern District of New York, seeks class-action status.
Visa charges businesses about 1.25 percent of the total sale on any credit card purchase and about 1.04 percent, plus 6 cents, of a check card's sale, Betsy Reithemeyer, a Wal-Mart spokeswoman, said.
The retailers say the debit card fees should be closer to the 5 to 10 cents they pay each time a customer uses an automated teller machine, or ATM, card.
``We're being charged a transaction fee that is very close to credit card fee, even though it's basically an electronic cash transaction from someone's checking account,'' said Reithemeyer.
Visa, the largest issuer of credit cards, said it would vigorously defend its ``Honor All Cards'' rule that retailers agree to follow.
``It is the cornerstone of what Visa stands for and is essential to the enormous benefits that Visa and its members deliver to merchants and consumers,'' the San Francisco-based company said in a statement.
The Visa check cards were used in $22 billion of transactions last year, resulting in at least $250 million in fees paid by retailers, according to American Banker, which quoted the lawsuit.
Those transactions would have cost about $33 million if the retailers were charged ATM-type fees.
Since MasterCard has a similar check card and is owned by virtually the same banks, the outcome of the suit will affect it the same as Visa.
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